The Sales Incentive Compensation Trap

You get the behaviors you pay for, not the ones you say you want. It is essential that your incentive compensation plan matches your marketing plan, and they must be kept synchronized during the year if your incentives are to drive the business that you want.  
 

You Get What You Inspect, Not What You Expect

As any business executive knows only too well, when managing employees you don’t automatically get the behaviors you say you want. You may really believe, for instance, in the need for excellent customer service but just saying that you value it doesn't mean that your employees will act in the way you wish they would, or that they will provide the service you expect.
 
I have written about how you don’t get the behaviors you want just by saying you want them in the article You get what you inspect, not what you expect, and this principle also holds true for sales compensation models. The rule here is that you will get the behaviors you compensate, not the ones you say you want. So if you want to sell more of a particular item, you have to design the compensation plan so that it mirrors and rewards the sales activity that you really want.
 

Sales Compensation

In small businesses there are as many mistakes as there are different approaches to sales compensation. Whether it is paying on revenues rather than gross margin, failing to match incentives to desired outcomes or a dozen other things, mistakes in this area can be very serious.